Setindiabiz Team |Updated : May 1, 2024

Filing of Form No BEN-2 By Company to ROC to Declare Significant Business Owner (SBO)

Overview :This is going to be a mega exercise by the Ministry of Corporate Affairs to identify the Key owners of a company in view of the amendments made on 8th February 2019 to the Companies (Significant Beneficial Owners) Rules, 2018. The new law not only provides clearer definitions for determination of individuals or entity as the Significant Business Owner of a company but also lays down detailed and elaborate procedure for seeking a declaration from the SBO and to file a Return in Form BEN-2 to the ROC.

The disclosures to be made by the individuals or entities holding 10% or more shares or voting power in any company is very comprehensive in nature and encompasses holdings not only in a company but also in any other entity such as LLP, any other body corporate, HUF, Partnership Firm, Discretionary Trust, Charitable Trust, Revocable trust, Pooled Investment Vehicle (PIV), or any entity controlled by such PIV. The expectations are very high from this new legal reporting and are expected to bring transparency in the shareholding structure of a company and would help the government agencies to identify and prevent the Benami and Money Laundering activities. In case there is a default on the part of the SBO, wherein they are not providing the response or in case the response is inappropriate then the company concerned can approach NCLT for suitable directions, including the freezing of their rights in the company.

The ministry of corporate affairs amended the Companies (Significant Beneficial Owners) Rules, 2018 which has come in to effect from its date of publication in The Gazette of India on 8th February 2019. This very amendment has introduced a structured and detailed procedural framework, new reporting requirement for every company registered in India under the Companies Act, 2013 or any previous law.

In brief, every company has to identify persons holding more than 10% of shares or voting right in the company and obtain a declaration from them in Form Number BEN-1. These persons shall be known as Significant Business Owner. For the purpose of soliciting the declaration in form BEN-1, the company shall send a letter in Form Number BEN-4 to every Significant Business Owner of the company annexing a blank declaration form (BEN-1). The shareholder is obligated to return the declaration within 90 days of the applicability of this rule and in case of failure, the company should move an application before NCLT for appropriate action against the rights of the SBO.

Within 30 Days of declaration from the persons of Significant Business Owners, the Company has to file a Return to the ROC in the form Number BEN-2 through any of the duly authorised director, Manager, CEO or CFO or Company Secretary of the Company. The form BEN-2 is also required to be further certified by a practising professional who may be a Chartered Accountant, Company Secretary or a Cost Accountant in whole time practice.

Following are the activities which have to be performed by every company in order of preference, with their due dates.

Directors may find themselves in situations where surrendering or canceling their Director Identification Number (DIN) becomes necessary. These actions are typically prompted by various circumstances, each carrying its implications for both the director and the company. Here are the common reasons why directors may choose to surrender or have their DIN canceled. Understanding these reasons will further enlighten you on the procedural formalities required for the same.

Faq's